gryphonms wrote:I am not so sure there would be as large of a cost increase due to raising minimum wage. Let's look at a McDonald's employee as an example. Say on average an employee produces 15 sales an hour and the average sale is $15.00. If their wage was increased $7.50 an hour the employers cost would be about $9.35 per hour. This would equate to about $.64 per meal. This would be a price increase of about 4%. In this case I do not think increasing a $15.00 meal by $.64 would have any effect on business. Also a 4% increase is not significant. I would prefer this over subsidizing businesses that I do not patronize.
The guy cooking fries and the guy cooking burgers produces no sales. The whole scenario is bogus. What you need to determine is the breakdown of the business costs.
Real estate, utilities, raw materials, advertising, labor, etc.
Once you know what percentage of your overall cost is labor, then you need to figure out what portion of that is minimum wage labor. That component cost will double. Then you can run the new cost model and make price adjustments.
Now to test the 4% McDonalds price increase theory.......If McDonalds' cost fir minimum wage labor was 4% of their overall cost and that element doubled due to a minimum wage increase, they may elect to pass on a 4% price increase. Minimum wage labor being 4% of McDonalds' costs sounds a bit low.
In the grand scheme of things, the upper class do not shop at McDonalds so the lower class and middle class will absorb the cost increase.